02.25.16

Hearing Wrap-up: House Dems Eager to Start Discussions on how to Tackle Puerto Rico’s Debt Crisis

Hearing Overview

The hearing on Puerto Rico today featured a sole witness from the U.S. Treasury Department to present the Obama Administration’s assessment of the U.S. territory’s debt crisis, as well as their recommendation for a comprehensive legislative package to assist the island in avoiding what could become a humanitarian crisis.

Witness

Key Takeaways

  • House Democrats are prepared to start immediate discussions with House Republicans about drafting bipartisan legislation that can be reported to the floor without further delay.
  • The Administration’s plan includes a debt restructuring authority paired with fiscal oversight, healthcare transformation, and tax incentives to reward work.
  • Congressman Don Beyer (D-Va.) stressed the importance of including the Administration’s Medicaid budget proposal in the final legislation, which includes $6.6 billion over 10 years for extending the Earned Income Tax Credit for Puerto Rico and approximately $30 billion in Medicaid funds for the U.S. territory.

Background

  • The hearing was the third formal legislative action taken since Speaker Paul Ryan’s public pronouncement – in the lead up to the vote on the FY2016 omnibus appropriations legislation on December 16, 2015 –  that he would instruct House committees of jurisdiction to come up with a responsible solution to the fiscal, economic and demographic crisis in Puerto Rico by March 31, 2016.
  • The Energy and Mineral Resources Subcommittee held an oversight hearing titled, The Energy Challenges Facing Puerto Rico on January 12th. The Indian, Insular and Alaska Native Affairs Subcommittee held an oversight hearing titled, The Need for the Establishment of a Puerto Rico Financial Stability and Economic Growth Authority on February 2nd.
  • Ranking Member Grijalva and Judiciary Committee Ranking Member John Conyers wrote a letter to Chairman Bishop and Judiciary Committee Chairman Bob Goodlatte on February 4th to request that they immediately begin bipartisan discussions on legislation to address Puerto Rico’s fiscal crisis. The Ranking Members have not received an invitation to begin those discussions.

Key Quotes

House Natural Resources Committee Ranking Member Raúl M. Grijalva (D-Ariz.):

  • “This is all occurring in the face of the fact that the Puerto Rican people have already endured more than a decade of austerity.  Over the last few years, the government of Puerto Rico has hiked the sales tax to the highest in the U.S., raised tuition at public universities, increased the cost of water and electricity, twice upped the tax on gasoline, and raised the retirement age. Puerto Rico now has a 45 percent poverty rate because of these measures.”
  • “As we begin our deliberations, we must ask ourselves who wins and who loses in each scenario. As for who wins when we blindly demand more austerity, a report released by my staff last summer answers that question. In short, austerity is a tool used by hedge funds to boost their profits at the expense of the men, women and children of Puerto Rico. A control board that would use austerity to help hedge funds lock in those profits no matter the human cost is not the way to go. We absolutely need to do better than that.”

Rep. Pedro R. Pierluisi (D-Puerto Rico Delegate):

  • “As long as they remain in Puerto Rico, my constituents are not American enough to receive fair treatment under federal programs that improve quality of life and promote work. And so they are moving to the states in huge numbers, because it is human nature to go where you have the best chance to survive and to thrive.”

U.S. Treasury’s Counselor Antonio Weiss:

  • “Without action, this crisis will escalate. The Government Development Bank, which is at the heart of Puerto Rico’s financial system, is dangerously undercapitalized. Debt payments in May and July, including nearly $800 million of constitutionally prioritized debt, are unlikely to be made. Mounting litigation will flood the courts.  And the central government itself could be forced to shut down entirely.”
  • “Puerto Rico has not had access to the municipal market for more than two years.  Municipal bond investors tell us that an orderly restructuring under clear federal guidelines is also the surest way to restore Puerto Rico’s market access.  And, it is the best outcome for municipal markets – far preferable to a protracted, disorderly series of defaults of unprecedented magnitude and complexity.  A post-restructured Puerto Rico that can pay its debts, invest in infrastructure and support economic growth should attract traditional investors to consider new investment.” 

A recording of the hearing is available on the House Natural Resources Committee Democrats website.

Press Contact

Media Contact: Diane Padilla

(202) 225-6065 or (202) 226-3522

Diane.Padilla@mail.house.gov